> Does it really mean that much for human welfare that real computer
> output is rising at a 50% annual rate? Does it make any intuitive
> sense at all? Is it right that a 10-15% increase in the nominal value
> of high-tech output is inflated, thanks to the wacky price indexes,
> into a 50% real increase?
>
Hear, hear. Even if the quality adjustments were valid, what difference would it make? Suppose we were talking about tennis shoes instead of computers. What if there were some technological revolution in the production of sneakers that led to 120% annual increases in their quality -- Nikes that are so much more comfortable, better fitting, maybe they let you jump two inches higher.
Would it make sense to allow those improvements to add an extra 2 or 3 percentage points to annual GDP growth -- when nothing else in the economy has changed?
Seth